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Individual Retirement Accounts

Metuchen Savings Bank offers Traditional, Roth, and Rollover IRAs depending on your personal needs.

 

 

IRA Features

Save for retirement and receive some tax benefits in the process even if your employer doesn’t offer a retirement plan. There are two main types of IRA – traditional IRAs and Roth IRAs. Each has its own set of rules and offers different tax benefits. Metuchen Savings Bank offers both traditional and Roth IRAs.

  • Available in terms from 3 months to 60 months
  • Additions not permitted during the term of the Certificate of Deposit.
  • Ask about the 18-month variable rate* with $100 minimum to open + additions permitted in any amount during the term without extending the maturity date.
  • Early withdrawal penalty waived if over 59 ½ years old.

Minimum balance to open and earn annual percentage yield: $500.00

Ask About our current high-yield specials.
* Interest rate is subject to change at any time.

Rates

Who qualifies to make IRA Contributions?

  • Anyone who earns income (or receives alimony) can put money in an IRA. Couples can also put money in an IRA for a non-working spouse.
  • Each person can put up to $5,500 in an IRA if you are age 49 or below and up to $6,500 if you are age 50 or above for the 2017 and 2018 tax year, so long as your contributions do not exceed your earned income. Each year, you have until the April 15 tax filing deadline to make your IRA payment for the previous tax year.

Traditional IRAs

Traditional IRAs are open to anyone up to the age of 70 1/2. Money in a traditional IRA grows tax-deferred. In other words, you won’t have to pay taxes on any earnings until you take the money out. That allows your money to grow faster than it would if you had to pay income tax each year on those earnings.
Your contributions to a traditional IRA may also be tax deductible, which is an attractive feature for many people. That’s because you get a portion of your IRA payment “back” immediately in the form of a lower tax bill.

If you are not eligible for an employer sponsored retirement plan, you can make tax-deductible contributions to a traditional IRA. You can also do so if your income falls below certain levels, regardless of your retirement plan status.

For tax year 2017, couples filing a joint tax return who report adjusted gross income of up to $99,000, or singles with income up to $62,000, are eligible to make fully deductible contributions to a traditional IRA. In addition, taxpayers with incomes slightly above those limits: more than $99,000 but less than $119,000 for couples and more than $62,000 but less than $72,000 for singles – can make partially deductible contributions.

For tax year 2018, couples filing a joint tax return who report adjusted gross income of up to $101,000, or singles with income up to $63,000, are eligible to make fully deductible contributions to a traditional IRA. In addition, taxpayers with incomes slightly above those limits: more than $101,000 but less than $121,000 for couples and more than $63,000 but less than $73,000 for singles – can make partially deductible contributions.

When you put money in a traditional IRA, you can’t take it out before you reach age 59 ½ without paying a penalty, although there are exceptions. Some people consider this a disadvantage of traditional IRAs, but it can help keep your retirement savings on track.

Once you start taking money out of a traditional IRA in retirement, you will have to pay ordinary income tax on any earnings and on your tax-deductible contributions, but no federal taxes on withdrawals of non-deductible contributions. Depending on where you live, you may have to pay state taxes on those withdrawals.

Roth IRAs

The benefits of Roth IRAs are almost exactly opposite those of traditional IRAs.

You can’t make tax-deductible contributions to a Roth IRA. On the other hand, the money you put in a Roth IRA grows not just tax-deferred, but tax-free. In other words, you won’t have to pay any federal taxes, or state taxes in most states, on your earnings when you take money out, provided you meet certain requirements. You are also less likely to have to pay a tax penalty if you withdraw money early from a Roth IRA.

There are no age limits for contributions to a Roth IRA, so long as you have earned income. On the other hand, there are income limits. However, those limits are quite high. Singles who report adjusted gross incomes of less than $118,000 in 2017 and couples with incomes less than $186,000 qualify for a full contribution. Taxpayers with slightly higher incomes – greater than or equal to $118,000 but less than $133,000 for singles and greater than or equal to $186,000 but less than $196,000 for couples filing jointly – can make partial contributions.

 

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